The Alliance for Economic Research and Ethics (AERE) recently highlighted a troubling drop in manufacturing tax revenue during the first quarter of 2026. AERE Chairman Dele Oye noted that this decline serves as a clear indicator of struggling industrial operations, prompting calls for the Nigerian government and the Central Bank of Nigeria to adopt significant reforms to bolster production.
While the Bank of Industry (BoI) distributed a record N644.9 billion in loans throughout 2025, Oye characterized this effort as insufficient to fundamentally shift the sector’s trajectory. Official data shows a 31 percent drop in Company Income Tax revenue for the manufacturing sector in Q1 2026, falling to N74.48 billion from N107.90 billion in the same period a year prior. This contraction is attributed to increasing production expenses and dwindling profit margins.
Oye recognized the progress made by the BoI in supporting 1.68 million jobs and lauded President Bola Tinubu for highlighting manufacturing within the 2025 Nigeria Industrial Policy. However, he emphasized that systemic barriers remain, such as persistent energy shortages, interest rates exceeding 35 percent, and unresolved foreign exchange obligations totaling $2.4 billion. These factors have left many factories functioning at less than half their capacity.
To address these challenges, AERE has proposed several urgent measures. These include limiting interest rates for manufacturing and agriculture to 15 percent, establishing industrial zones with reliable electricity, restoring tax incentives within Free Trade Zones, and reducing government borrowing. Oye stressed that without these aggressive structural changes, the manufacturing sector will continue to falter.
